Purdue Pharma files for bankruptcy, plans settlements amid opioid crisis

BOSTON— OxyContin maker Purdue Pharma has embarked on a multibillion-dollar plan to settle thousands of lawsuits over the nation’s deadly opioid crisis by transforming itself in bankruptcy court into a sort of hybrid between a business and a charity.

Whether the company can pull it off remains to be seen, especially with about half the states opposed to the deal.

The pharmaceutical giant filed for bankruptcy late Sunday, step one in a plan it says would provide $10 billion to $12 billion to help reimburse state and local governments and clean up the damage done by powerful prescription painkillers and illegal opioids like heroin and fentanyl, which together have been blamed for more than 400,000 deaths in the U.S. in the past two decades.

The plan calls for turning Purdue into a “public benefit trust” that would continue selling opioids but hand its profits over to those who have sued the company. The Sackler family would give up ownership of Purdue and contribute at least $3 billion toward the settlement.

It will be up to a federal bankruptcy judge to decide whether to approve or reject the settlement or seek modifications.

Two dozen states plus key lawyers who represent many of the 2,000-plus local governments suing the Stamford, Connecticut-based company have signed on to the plan.

But other states have come out strongly against it, arguing that it won’t provide as much money as promised, that the Sacklers are getting off easy and that the family has extracted a fortune from the company and hidden it away in shell companies and Swiss bank accounts.

“The Sackler family sucked billions of dollars out of Purdue and is now throwing the carcass of this drug company into bankruptcy,” said North Carolina Attorney General Josh Stein.

He and his counterparts in such states as Massachusetts, Pennsylvania and New York have said they will continue pursuing the company and the Sacklers in court.

The states in favor of the settlement include Tennessee, Texas and Ohio, where Attorney General Dave Yost said the deal is better than other possibilities.

“The settlement puts the Sacklers out of the drug business permanently — not just in the United States, but around the globe. It takes every last dime that Purdue has and billions more from the Sacklers personally,” Yost said.

“The only alternative involves years of additional litigation in the forlorn hope of getting more personal money for corporate conduct.”